Tuesday, January 4, 2011

The Fed's Insider Elite List About to Expand

Currently, there are 18 primary dealers in the U.S. government bond market, these are the only dealers that the Federal Reserve will trade with. They include the usual suspects,  Goldman Sachs,  J.P. Morgan and the like. I have it on good authority that during the financial crisis the Fed shoveled money to these dealers by bidding outrageously high for securities or selling outrageously low. The dealers then flipped the Fed position in the open market for immediate profit.

Now, WSJ reports that the Fed is going to increase members to the exclusive club:
After a hiatus of more than one year, the Federal Reserve is likely to expand a select group of dealers to help with hefty Treasury debt sales and the central bank’s monetary-policy operations, according to traders and dealers familiar with the matter...

Several banks have applied to join the pool over the past year, including French bank Societe Generale SA, Canadian bank Scotia Capital, the investment-banking arm of the Bank of Nova Scotia, and MF Global, the world’s largest broker of exchange-traded futures and options that is headquartered in New York.

According to the NY Fed, current members are:
BNP Paribas Securities Corp.

Barclays Capital Inc.

Cantor Fitzgerald & Co.

Citigroup Global Markets Inc.

Credit Suisse Securities (USA) LLC

Daiwa Capital Markets America Inc.

Deutsche Bank Securities Inc.

Goldman, Sachs & Co.

HSBC Securities (USA) Inc.

Jefferies & Company, Inc.

J.P. Morgan Securities LLC

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Mizuho Securities USA Inc.

Morgan Stanley & Co. Incorporated

Nomura Securities International, Inc.

RBC Capital Markets, LLC

RBS Securities Inc.

UBS Securities LLC


  1. I've been wondering when MFG, under the aegis of ex-Goldman CEO, John Corzine, would become a PD.

  2. I didn't realize UBS was a PD. I'm sure this came up during their conversations with the IRS when they were arm-twisted into selling out their "tax evading" clients.

    This is just another reminder why you shouldn't accept any gifts or favors from the State. They'll always use it as leverage to control you later.